FMCG sales dip: GST changes, heavy rains hit Q3 demand; global majors stay bullish on India growth
Fast-moving consumer goods (FMCG) makers in India — from soap to soft drinks — saw a slight hit to sales in the September quarter due to disruptions arising from Goods and Services Tax (GST) reforms and heavy rains across parts of the country. However, global majors such as Unilever, Reckitt, Heineken, PepsiCo, and Coca-Cola expressed optimism about growth in the coming quarters, backed by improving macroeconomic conditions.As per news agency PTI, Unilever CEO Fernando Fernandez said India remains well-positioned in the medium term despite short-term disruptions caused by GST changes. “Our emerging market performance is improving; India, in particular, is very well positioned over the medium term. The GST reform has had some impact in the short term, but we believe it is very good news for 40 per cent of our portfolio with close to a 10 per cent price reduction,” he said.British major Reckitt noted that its revenue growth in India was affected by the new GST slabs in the September quarter, though its germ protection brand Dettol showed volume-led growth. “The impact in Q3 of GST phasing being low to mid-single digits and that our India like-for-like was low single digit in Q3,” said Reckitt CFO Shannon Eisenhardt, while CEO Kris Licht added that India remains a key growth market in its emerging portfolio.Dutch brewer Heineken NV, which owns United Breweries Ltd (UBL), reported a “mid-single-digit” decline in India beer volumes during the September quarter, attributing it to unusually heavy monsoon rains. As per PTI, Heineken CFO Harold van den Broek said, “In India, organic net revenue grew by a mid-single-digit, while beer volume fell by a mid-single-digit, impacted by the monsoon season. We outperformed the market.”American beverage giants PepsiCo and Coca-Cola also faced disruptions due to weather conditions. PepsiCo Chairman and CEO Ramon L Laguarta said India’s growth was impacted by rain and competitive pressures, but added the company expects to “come back strong”. Similarly, Coca-Cola COO Henrique Gnani Braun said its Asia-Pacific volumes declined due to “inclement weather”, while CEO James Quincey remarked that India holds “huge potential for growth in volume over many, many years” despite lower prices.Meanwhile, French spirits company Pernod Ricard said its India sales grew 3 per cent during the quarter but were impacted by excise policy changes in Maharashtra. “While enjoying strong underlying consumer demand dynamics, sales in India are negatively impacted by the excise policy changes in Maharashtra implemented in July,” CFO Hélène de Tissot said, adding that the company expects the policy to continue weighing on sales through the year.Swiss food major Nestlé SA, in its global earnings update, highlighted India’s “strong performance” and “good momentum”, according to PTI.
